The February jobs report should offer a definitive ruling on a potential March rate cut
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Fears of a stock market crash are swirling ahead of the February jobs report due this Friday, March 8. Indeed, the upcoming employment data should provide the next piece of the puzzle as it pertains to the Federal Reserve’s rate-cut schedule.
What do you need to know about this week’s major economic report?
Well, the jobs report remains an important indicator of the health of the economy and its trajectory. Despite elevated interest rates, unemployment has remained relatively low the past six months, largely eschewing rumors of a Fed-induced recession in the back half of 2023.
That said, while recession concerns have eased in 2024, economists and analysts have been laser-focused on the central bank’s anticipated rate cuts. The Fed has already stated it plans to lower the benchmark rate three to four times in 2024. The major question is: When?
The fact is, the relative strength of the economy has allowed the Fed to stave off cutting rates, as part of an effort to bolster its disinflationary agenda. Should the economy show signs of slowing down, via falling consumer spending or elevated unemployment, the Fed would likely pull the trigger on rate cuts sooner than later to avoid economic fallout.
As such, with the March policy meeting just weeks away, economists will be watching this week’s jobs report especially closely.
What should you expect this time around?
Jobs Report Looms Large Amid Swirling Stock Market Crash Rumors
If you recall, the January jobs report — released on Feb. 2 — showed that the U.S. labor market was as strong as ever. The economy added more than 350,000 non-farm payrolls during the period, reflecting an unemployment rate of 3.7%.
This was well below many projections, continuing to defy bearish economists who expected some interest rate-related economic deterioration. Unfortunately, the report also notably lowered the chance of rate cut in March, with the state of the U.S. economy reassuringly strong.
This time around, the economy is expected to show that the economy added 190,000 jobs in February, with unemployment remaining unchanged at 3.7%.
Interestingly, ahead of the jobs report, Fed Chair Jerome Powell is set to testify before Congress on Wednesday. Powell is expected to update lawmakers on the state of the economy and provide insight into the path forward as it pertains to monetary policy. This marks the first major public speech for Powell since the January policy meeting, where he told reporters that Fed officials want to wait for more “good data” before cutting rates.
“The labor market remains strong. If we saw an unexpected weakening in — certainly, in the labor market that would certainly weigh on cutting sooner, absolutely, and if we saw inflation being stickier or higher or those sorts of things we would argue for moving later,” Powell told reporters in January.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.